Gold regains some of 3.5% lost in 2011

Silver opened with a half-dollar per ounce rise and traded at the $28.82 level this morning, with buyers motivated by largely the same concerns that drove gold values higher. Speaking of silver supplies (as well as gold’s), Fidelity Investor’s Jim Lowell recently noted in a Hard Assets Investor interview that: “In neither metal is there a supply problem. Wherever you are trading a commodity that has had multiple significant run-ups year-over-year, without any supply problems, you've got to really zero in on the psychology of demand. So I think both metals head south sometime this year, I think probably sooner rather than later.”

As for platinum and palladium, they quickly recaptured the round figures at $1,800 and $800 with sizeable gains of their own this morning. The former rose $16 to the $1,818.00 mark and the latter climbed $12 to reach $804.00 per ounce. In addition to intense ETF-originated “attention” and a recovering global auto sector, the noble metals’ buyers are eyeing recent JP Morgan and RBC Capital warnings about potential output problems in South Africa. The country is responsible for 75% of the global platinum supply and 40% of that of palladium, not to mention the lion’s share (85%) of the world’s rhodium output. Power supply issues and labor unrest continue to plague the South African PGM mining sector.

Unrest of another type (as in: food price-sparked riots) has flared up from Algeria to Tunisia, and from Haiti to Egypt. Nations such as Russia, China, India, and South Korea – to mention but a few – have been grappling with rising food costs and have unrolled plans to curb food exports, release tonnage from strategic stockpiles, or import sharply higher amounts of same. Currently benefiting from such alarming patterns (in addition to the aforementioned rolling-in-the-dough hedge funds) is the US farming sector. Its income may have risen to nearly $88 billion in 2010 – a new record.

Rising prices in another speculative activity-impacted commodity – crude oil – are once again raising questions about demand destruction and consumer protests. MF Global analysts remind us that this is not the summer of 2008, when consumers were better able to withstand $100 per barrel black gold price tags. In fact, the trend upon which crude oil prices have embarked of late (pointing towards $4 a gallon gasoline by summer) poses a potential threat to the emergent global economic recovery, in the opinion of some economists.

Economists will also have plenty of fodder for debate when they try to reconcile somewhat…differing pronouncements coming from within the Fed. Just yesterday, Philly Fed President Plosser noted that he has not shelved his leanings towards an interest rate hike (this very year), relatively high unemployment levels notwithstanding. Said Mr. Plosser: “it might be time for us to begin thinking about how do we begin to gradually take our foot off the accelerator.” On the other hand, Mr. Plossser’s St. Louis counterpart, Mr. Bullard remarked in a recent interview that “while the U.S. outlook has improved,” he wants to “see more evidence before altering the Fed’s plan to buy $600 billion in Treasuries through June.”